A sentencing hearing for three individuals convicted in a high-profile market manipulation case involving Hong Kong-listed Ching Lee Holdings has been adjourned until July, according to court officials.
Additional time is needed to consider appropriate sentences and fines for the defendants, Douglas Yau Tak Hong, deputy judge of the Court of First Instance of the High Court, stated during a hearing on Monday. The next hearing will be on July 22.
The three convicted individuals, Sit Yi Ki, Lam Wing Ki, and Tam Cheuk Hang, were found guilty in a landmark prosecution brought by the Securities and Futures Commission (SFC) last month. It was a “highly sophisticated and complex” market manipulation case, and also marked the first time an offence under the Securities and Futures Ordinance had been tried at the Court of First Instance, the SFC said.
The trio will remain in custody while awaiting sentencing. Nelson Ho Ming Hin and Simon Suen Man, the other two individuals alleged to have been involved in the market manipulation case, are still at large and currently wanted by authorities.
Ching Lee Holdings, listed on Hong Kong’s secondary GEM board, is an investment holding company primarily involved in construction, consultancy and project-management services in the city. The company’s stock price stood at HK$0.075 per share on Monday with a market capitalisation of HK$76 million (US$9.7 million), after plunging nearly 14 per cent this year and 99 per cent from its all-time high in August 2016.
The false trading scheme was planned and commenced before Ching Lee’s initial public offering (IPO) on March 29, 2016, and lasted for more than five months. The conspirators artificially boosted turnover of the shares by conducting manipulative transactions among 156 securities accounts under their control, according to the SFC.
The manipulative activities inflated Ching Lee’s share price by as much as 2000 per cent from the IPO price to HK$5.71 in August 2016, before a collapse of 90 per cent on September 7, 2016. The scheme netted illicit profits of more than HK$124 million, the market watchdog said.
The stock exchange’s GEM board has been stuck in malaise in recent years due to poor liquidity and has sometimes fallen prey to manipulators. Formerly known as Growth Enterprise Market, it was established in 1999 to accommodate companies that did not meet the tougher main board requirements. As of end-May, it had 323 firms with a combined market capitalisation of HK$46.88 billion. In comparison, the main board has 2,287 companies with a market capitalisation of HK$32.87 trillion.
More than 95 per cent of the stocks in the GEM universe are “penny stocks”, trading at less than HK$1 per share, according to Bloomberg data. Average daily turnover was HK$46 million in May, according to stock exchange
data, more than 60 per cent below the average volume in 2023.
The S&P/HKEX GEM Index has plunged 25 per cent this year to hover around the lowest level since it was established in November 1999. The 45-member gauge, which covers about 75 per cent of the market capitalisation, has crashed 99 per cent from its peak in January 2001, during the US dotcom meltdown.
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